Japan Adds to Supply of Kyoto CO2 Offsets Faster Than AAUs

By Mathew Carr -
Feb 10, 2012

Japan last year added to its
stockpile of United Nations emission offsets at a faster pace
than Assigned Amount Units, suggesting the nation or its
emitters have not started swapping the credits for cheaper AAUs.

Japan had 120.1 million metric tons of UN Certified
Emission Reduction credits at the end of the year, 17 percent
more than a year earlier, according to reports on the website of
the UN Framework Convention on Climate Change. The nation more
than doubled the number of Emission Reduction Units in its
inventory to 5.1 million tons, as its holdings of Assigned
Amount Units rose 0.6 percent to 6.123 billion tons.

Japanese emitters may ramp up exchanges of CERs for cheaper
AAUs this year to free up cash, an executive from Mitsubishi
Corp. (8058) said last year. Swapping might push down the price of UN
credits and drive European Union carbon allowances lower because
EU factories and power stations are the biggest source of demand
for the offsets.

Not much swapping was taking place as of October, Jerzy Chlebowski, manager of the global environment business
development division of Mitsubishi Corp. International (Europe)
Plc, said at the time. “Toward 2012, this process will start
and get more intense,” he said.

AAUs, given to developed nations with targets in the UN-
overseen 1997 Kyoto Protocol, were valued in October at 3.50
euros ($4.61) a ton by Trading Emissions Plc. UN CERs for
December were at 3.74 euros today on the ICE Futures Europe
exchange in London as of 2:20 p.m., compared with 7.80 euros for
EU allowances.